|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
|
|
☒
|
Accelerated Filer
|
☐
|
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|
Non-accelerated Filer
|
☐
|
Smaller Reporting Company
|
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Emerging Growth Company
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|||
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FORM 10-K
ITEM
|
|
PAGE
NUMBER
|
|
|
|
|||
|
ITEM 1.
|
3
|
||
|
ITEM 1A.
|
18
|
||
|
ITEM 1B.
|
29
|
||
|
ITEM 2.
|
30
|
||
|
ITEM 3.
|
30
|
||
|
ITEM 4.
|
30
|
||
|
31
|
|||
|
ITEM 5.
|
33
|
||
|
ITEM 6.
|
34
|
||
|
ITEM 7.
|
35
|
||
|
ITEM 7A.
|
63
|
||
|
ITEM 8.
|
65
|
||
|
ITEM 9.
|
107
|
||
|
ITEM 9A.
|
107
|
||
|
ITEM 9B.
|
107
|
||
|
ITEM 10.
|
108
|
||
|
ITEM 11.
|
108
|
||
|
ITEM 12.
|
108
|
||
|
ITEM 13.
|
108
|
||
|
ITEM 14.
|
108
|
||
|
ITEM 15.
|
109
|
||
|
ITEM 16.
|
109
|
||
|
109
|
|||
|
112
|
|||
|
Item 1.
|
Business.
|
|
Asset Class
|
Value in
Billions
|
Percentage
of Total
AUM
|
|||||
|
Fixed Income
|
$
|
656.7
|
|
46
|
%
|
||
|
Equity
|
432.0
|
|
31
|
%
|
|||
|
Multi-Asset
|
133.8
|
|
9
|
%
|
|||
|
Alternative
|
124.0
|
|
9
|
%
|
|||
|
Cash Management
|
72.4
|
|
5
|
%
|
|||
|
Total
|
$
|
1,418.9
|
|
100
|
%
|
||
|
(in billions)
Asset Class
|
U.S. Funds
|
Non-U.S. Funds
|
Institutional Separate Accounts
|
Retail Separately Managed Accounts
|
Other Accounts,
Alternative Investment
Products and Trusts
|
Total
|
||||||||||||||||||
|
Fixed Income
|
$
|
199.1
|
|
$
|
69.0
|
|
$
|
342.8
|
|
$
|
30.1
|
|
$
|
15.7
|
|
$
|
656.7
|
|
||||||
|
Equity
|
215.4
|
|
71.2
|
|
57.2
|
|
65.4
|
|
22.8
|
|
432.0
|
|
||||||||||||
|
Multi-Asset
|
81.9
|
|
8.0
|
|
6.4
|
|
7.8
|
|
29.7
|
|
133.8
|
|
||||||||||||
|
Alternative
|
6.0
|
|
9.0
|
|
33.1
|
|
—
|
|
75.9
|
|
124.0
|
|
||||||||||||
|
Cash Management
|
36.4
|
|
35.0
|
|
1.0
|
|
—
|
|
—
|
|
72.4
|
|
||||||||||||
|
Total
|
$
|
538.8
|
|
$
|
192.2
|
|
$
|
440.5
|
|
$
|
103.3
|
|
$
|
144.1
|
|
$
|
1,418.9
|
|
||||||
|
Item 1A.
|
Risk Factors.
|
|
Item 1B.
|
Unresolved Staff Comments.
|
|
Item 2.
|
Properties.
|
|
Location
|
Owned Square
Footage
|
Owned Square
Footage Leased
to Third Parties
|
||||
|
San Mateo, California
|
743,793
|
|
357,383
|
|
||
|
St. Petersburg, Florida
|
560,948
|
|
314,685
|
|
||
|
Rancho Cordova, California
|
445,023
|
|
62,660
|
|
||
|
Hyderabad, India
|
379,052
|
|
—
|
|
||
|
Poznan, Poland
|
284,436
|
|
—
|
|
||
|
Ft. Lauderdale, Florida
|
102,246
|
|
20,264
|
|
||
|
Edinburgh, Scotland
|
87,016
|
|
26,210
|
|
||
|
Other
|
90,891
|
|
12,091
|
|
||
|
Total
|
2,693,405
|
|
793,293
|
|
||
|
Item 3.
|
Legal Proceedings.
|
|
Item 4.
|
Mine Safety Disclosures.
|
|
Item 5.
|
Market for Registrant
’
s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
|
Month
|
Total Number of
Shares Purchased
|
Average Price
Paid per Share
|
Total Number of
Shares Purchased
As Part of Publicly
Announced Plans
or Programs
|
Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plans or
Programs
|
|||||||||
|
July 2020
|
—
|
|
$
|
—
|
|
—
|
|
39,722,462
|
|
||||
|
August 2020
|
669,887
|
|
21.06
|
|
669,887
|
|
39,052,575
|
|
|||||
|
September 2020
|
838,451
|
|
20.26
|
|
838,451
|
|
38,214,124
|
|
|||||
|
Total
|
1,508,338
|
|
1,508,338
|
|
|||||||||
|
Item 6.
|
Selected Financial Data.
|
|
as of and for the fiscal years ended September 30,
|
2020
1
|
2019
|
2018
|
2017
|
2016
|
|||||||||||||||
|
Summary of Operations
2
(in millions)
|
||||||||||||||||||||
|
Operating revenues
|
$
|
5,566.5
|
|
$
|
5,669.4
|
|
$
|
6,204.5
|
|
$
|
6,305.0
|
|
$
|
6,534.6
|
|
|||||
|
Operating income
|
1,048.9
|
|
1,466.9
|
|
2,028.2
|
|
2,199.6
|
|
2,295.1
|
|
||||||||||
|
Operating margin
|
18.8
|
%
|
25.9
|
%
|
32.7
|
%
|
34.9
|
%
|
35.1
|
%
|
||||||||||
|
Net income attributable to Franklin Resources, Inc.
|
798.9
|
|
3
|
1,195.7
|
|
4
|
764.4
|
|
5
|
1,696.7
|
|
1,726.7
|
|
|||||||
|
Financial Data
(in millions)
|
||||||||||||||||||||
|
Total assets
|
$
|
20,220.9
|
|
$
|
14,532.2
|
|
$
|
14,383.5
|
|
$
|
17,534.0
|
|
$
|
16,098.8
|
|
|||||
|
Debt
|
3,017.1
|
|
696.9
|
|
695.9
|
|
1,044.2
|
|
1,401.2
|
|
||||||||||
|
Debt of consolidated investment products
|
1,333.4
|
|
50.8
|
|
32.6
|
|
53.4
|
|
682.2
|
|
||||||||||
|
Franklin Resources, Inc. stockholders’ equity
|
10,114.5
|
|
9,906.5
|
|
9,899.2
|
|
12,620.0
|
|
11,935.8
|
|
||||||||||
|
Operating cash flows
|
1,021.4
|
|
201.6
|
|
2,229.7
|
|
1,135.4
|
|
1,727.7
|
|
||||||||||
|
Investing cash flows
|
(3,243.1
|
)
|
(1,077.1
|
)
|
(290.4
|
)
|
52.0
|
|
192.2
|
|
||||||||||
|
Financing cash flows
|
194.2
|
|
(40.5
|
)
|
(3,761.7
|
)
|
(956.0
|
)
|
(1,800.7
|
)
|
||||||||||
|
Assets Under Management
(in billions)
|
||||||||||||||||||||
|
Ending
|
$
|
1,418.9
|
|
$
|
692.6
|
|
$
|
717.1
|
|
$
|
753.2
|
|
$
|
733.3
|
|
|||||
|
Average
6
|
832.9
|
|
697.0
|
|
740.5
|
|
736.9
|
|
749.3
|
|
||||||||||
|
Per Common Share
|
||||||||||||||||||||
|
Earnings
|
||||||||||||||||||||
|
Basic
|
$
|
1.59
|
|
$
|
2.35
|
|
$
|
1.39
|
|
$
|
3.01
|
|
$
|
2.94
|
|
|||||
|
Diluted
|
1.59
|
|
2.35
|
|
1.39
|
|
3.01
|
|
2.94
|
|
||||||||||
|
Cash dividends declared
|
1.08
|
|
1.04
|
|
3.92
|
|
0.80
|
|
0.72
|
|
||||||||||
|
Book value
|
20.43
|
|
19.84
|
|
19.07
|
|
22.74
|
|
20.93
|
|
||||||||||
|
1
|
Includes the impact of the Company’s acquisition of Legg Mason, Inc. which was effective
July 31, 2020
. See Note
3
– Acquisitions in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report on Form 10‑K for more information.
|
|
2
|
In fiscal year
2020
, the Company changed the presentation of its consolidated statements of income to include dividend and interest income and other expenses from consolidated investment products in non-operating income. Amounts for the comparative prior fiscal years have been reclassified to conform to the current presentation. These reclassifications had no impact on previously reported net income attributable to Franklin Resources, Inc.
|
|
3
|
Includes an income tax benefit of $27.0 million, net of valuation allowance, from capital losses subsequent to the change in corporate tax structure of a foreign holding company to a U.S. branch.
|
|
4
|
Includes an income tax charge of
$86.0 million
due to a revision to the estimated income tax charge that was recognized in fiscal year
2018
resulting from enactment of the Tax Cuts and Jobs Act of 2017 (“the Tax Act”).
|
|
5
|
Includes an estimated income tax charge of
$968.8 million
resulting from enactment of the Tax Act.
|
|
6
|
Represents simple monthly average AUM.
|
|
Item 7.
|
Management
’
s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
(in millions, except per share data)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
1
|
2019
|
2018
|
|||||||||||||||
|
Operating revenues
2
|
$
|
5,566.5
|
|
$
|
5,669.4
|
|
$
|
6,204.5
|
|
(2
|
%)
|
(9
|
%)
|
|||||
|
Operating income
2
|
1,048.9
|
|
1,466.9
|
|
2,028.2
|
|
(28
|
%)
|
(28
|
%)
|
||||||||
|
Operating margin
3
|
18.8
|
%
|
25.9
|
%
|
32.7
|
%
|
||||||||||||
|
Net income attributable to Franklin Resources, Inc.
|
$
|
798.9
|
|
$
|
1,195.7
|
|
$
|
764.4
|
|
(33
|
%)
|
56
|
%
|
|||||
|
Diluted earnings per share
|
$
|
1.59
|
|
$
|
2.35
|
|
$
|
1.39
|
|
(32
|
%)
|
69
|
%
|
|||||
|
As adjusted (non-GAAP):
4
|
||||||||||||||||||
|
Adjusted operating income
|
$
|
1,491.1
|
|
$
|
1,654.2
|
|
$
|
2,093.5
|
|
(10
|
%)
|
(21
|
%)
|
|||||
|
Adjusted operating margin
|
38.5
|
%
|
42.6
|
%
|
49.8
|
%
|
|
|
|
|
||||||||
|
|
|
|
|
|||||||||||||||
|
Adjusted net income
|
$
|
1,311.0
|
|
$
|
1,331.3
|
|
$
|
798.1
|
|
(2
|
%)
|
67
|
%
|
|||||
|
Adjusted diluted earnings per share
|
$
|
2.61
|
|
$
|
2.62
|
|
$
|
1.45
|
|
0
|
%
|
81
|
%
|
|||||
|
1
|
Includes the impact of the Company’s acquisition of Legg Mason, Inc. which was effective
July 31, 2020
. See Note
3
– Acquisitions in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for information.
|
|
2
|
In fiscal year
2020
, the Company changed the presentation of its consolidated statements of income to include dividend and interest income and other expenses from consolidated investment products in non-operating income (expense). Amounts for the comparative prior fiscal years have been reclassified to conform to the current presentation. These reclassifications had no impact on previously reported net income attributable to Franklin Resources, Inc.
|
|
3
|
Defined as operating income divided by total operating revenues.
|
|
4
|
“Adjusted operating income,” “adjusted operating margin,” “adjusted net income” and “adjusted diluted earnings per share” are based on methodologies other than generally accepted accounting principles. See “Supplemental Non-GAAP Financial Measures” for definitions and reconciliations of these measures.
|
|
(in billions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
as of September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Fixed Income
|
$
|
656.7
|
|
$
|
250.6
|
|
$
|
258.5
|
|
162
|
%
|
(3
|
%)
|
|||||
|
Equity
|
432.0
|
|
263.9
|
|
304.6
|
|
64
|
%
|
(13
|
%)
|
||||||||
|
Multi-Asset
|
133.8
|
|
123.6
|
|
126.7
|
|
8
|
%
|
(2
|
%)
|
||||||||
|
Alternative
|
124.0
|
|
45.0
|
|
18.0
|
|
176
|
%
|
150
|
%
|
||||||||
|
Cash Management
|
72.4
|
|
9.5
|
|
9.3
|
|
662
|
%
|
2
|
%
|
||||||||
|
Total
|
$
|
1,418.9
|
|
$
|
692.6
|
|
$
|
717.1
|
|
105
|
%
|
(3
|
%)
|
|||||
|
Average for the Year
|
$
|
832.9
|
|
$
|
697.0
|
|
$
|
740.5
|
|
19
|
%
|
(6
|
%)
|
|||||
|
(in billions)
|
Average AUM
|
2020 vs. 2019
|
2019 vs. 2018
|
|||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Fixed Income
|
$
|
330.5
|
|
$
|
256.1
|
|
$
|
275.2
|
|
29
|
%
|
(7
|
%)
|
|||||
|
Equity
|
290.3
|
|
275.5
|
|
310.8
|
|
5
|
%
|
(11
|
%)
|
||||||||
|
Multi-Asset
|
123.0
|
|
122.2
|
|
129.3
|
|
1
|
%
|
(5
|
%)
|
||||||||
|
Alternative
|
63.8
|
|
33.7
|
|
17.2
|
|
89
|
%
|
96
|
%
|
||||||||
|
Cash Management
|
25.3
|
|
9.5
|
|
8.0
|
|
166
|
%
|
19
|
%
|
||||||||
|
Total
|
$
|
832.9
|
|
$
|
697.0
|
|
$
|
740.5
|
|
19
|
%
|
(6
|
%)
|
|||||
|
Mix of Average AUM
|
|||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
||||||
|
Fixed Income
|
39
|
%
|
37
|
%
|
37
|
%
|
|||
|
Equity
|
35
|
%
|
40
|
%
|
42
|
%
|
|||
|
Multi-Asset
|
15
|
%
|
17
|
%
|
18
|
%
|
|||
|
Alternative
|
8
|
%
|
5
|
%
|
2
|
%
|
|||
|
Cash Management
|
3
|
%
|
1
|
%
|
1
|
%
|
|||
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
|||
|
(in billions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Beginning AUM
|
$
|
692.6
|
|
$
|
717.1
|
|
$
|
753.2
|
|
(3
|
%)
|
(5
|
%)
|
|||||
|
Long-term inflows
|
182.4
|
|
175.0
|
|
165.5
|
|
4
|
%
|
6
|
%
|
||||||||
|
Long-term outflows
|
(244.0
|
)
|
(206.8
|
)
|
(203.5
|
)
|
18
|
%
|
2
|
%
|
||||||||
|
Long-term net flows
|
(61.6
|
)
|
(31.8
|
)
|
(38.0
|
)
|
94
|
%
|
(16
|
%)
|
||||||||
|
Cash management net flows
|
(9.9
|
)
|
0.9
|
|
3.5
|
|
NM
|
|
(74
|
%)
|
||||||||
|
Total net flows
|
(71.5
|
)
|
(30.9
|
)
|
(34.5
|
)
|
131
|
%
|
(10
|
%)
|
||||||||
|
Acquisitions
|
806.5
|
|
26.4
|
|
9.8
|
|
NM
|
|
169
|
%
|
||||||||
|
Net market change, distributions and other
|
(8.7
|
)
|
(20.0
|
)
|
(11.4
|
)
|
(57
|
%)
|
75
|
%
|
||||||||
|
Ending AUM
|
$
|
1,418.9
|
|
$
|
692.6
|
|
$
|
717.1
|
|
105
|
%
|
(3
|
%)
|
|||||
|
(in billions)
|
||||||||||||||||||||||||
|
for the fiscal year ended
September 30, 2020 |
Fixed
Income
|
Equity
|
Multi-Asset
|
Alternative
|
Cash
Management
|
Total
|
||||||||||||||||||
|
AUM at October 1, 2019
|
$
|
250.6
|
|
$
|
263.9
|
|
$
|
123.6
|
|
$
|
45.0
|
|
$
|
9.5
|
|
$
|
692.6
|
|
||||||
|
Long-term inflows
|
79.7
|
|
64.3
|
|
27.8
|
|
10.6
|
|
—
|
|
182.4
|
|
||||||||||||
|
Long-term outflows
|
(112.9
|
)
|
(90.2
|
)
|
(33.6
|
)
|
(7.3
|
)
|
—
|
|
(244.0
|
)
|
||||||||||||
|
Long-term net flows
|
(33.2
|
)
|
|
(25.9
|
)
|
|
(5.8
|
)
|
|
3.3
|
|
|
—
|
|
|
(61.6
|
)
|
|||||||
|
Cash management net flows
|
—
|
|
—
|
|
—
|
|
—
|
|
(9.9
|
)
|
(9.9
|
)
|
||||||||||||
|
Total net flows
|
(33.2
|
)
|
(25.9
|
)
|
(5.8
|
)
|
3.3
|
|
(9.9
|
)
|
(71.5
|
)
|
||||||||||||
|
Acquisitions
|
449.4
|
|
183.2
|
|
22.5
|
|
75.8
|
|
75.6
|
|
806.5
|
|
||||||||||||
|
Net market change, distributions and other
|
(10.1
|
)
|
10.8
|
|
(6.5
|
)
|
(0.1
|
)
|
(2.8
|
)
|
(8.7
|
)
|
||||||||||||
|
AUM at September 30, 2020
|
$
|
656.7
|
|
$
|
432.0
|
|
$
|
133.8
|
|
$
|
124.0
|
|
$
|
72.4
|
|
$
|
1,418.9
|
|
||||||
|
(in billions)
|
||||||||||||||||||||||||
|
for the fiscal year ended
September 30, 2019 |
Fixed
Income
|
Equity
|
Multi-Asset
|
Alternative
|
Cash
Management
|
Total
|
||||||||||||||||||
|
AUM at October 1, 2018
|
$
|
258.5
|
|
$
|
304.6
|
|
$
|
126.7
|
|
$
|
18.0
|
|
$
|
9.3
|
|
$
|
717.1
|
|
||||||
|
Long-term inflows
|
75.6
|
|
58.5
|
|
34.8
|
|
6.1
|
|
—
|
|
175.0
|
|
||||||||||||
|
Long-term outflows
|
(81.9
|
)
|
(83.5
|
)
|
(35.9
|
)
|
(5.5
|
)
|
—
|
|
(206.8
|
)
|
||||||||||||
|
Long-term net flows
|
(6.3
|
)
|
|
(25.0
|
)
|
|
(1.1
|
)
|
|
0.6
|
|
|
—
|
|
|
(31.8
|
)
|
|||||||
|
Cash management net flows
|
—
|
|
—
|
|
—
|
|
—
|
|
0.9
|
|
0.9
|
|
||||||||||||
|
Total net flows
|
(6.3
|
)
|
(25.0
|
)
|
(1.1
|
)
|
0.6
|
|
0.9
|
|
(30.9
|
)
|
||||||||||||
|
Acquisition
|
—
|
|
—
|
|
—
|
|
26.4
|
|
—
|
|
26.4
|
|
||||||||||||
|
Net market change, distributions and other
|
(1.6
|
)
|
(15.7
|
)
|
(2.0
|
)
|
—
|
|
(0.7
|
)
|
(20.0
|
)
|
||||||||||||
|
AUM at September 30, 2019
|
$
|
250.6
|
|
$
|
263.9
|
|
$
|
123.6
|
|
$
|
45.0
|
|
$
|
9.5
|
|
$
|
692.6
|
|
||||||
|
(in billions)
|
||||||||||||||||||||||||
|
for the fiscal year ended
September 30, 2018 |
Fixed
Income
|
Equity
|
Multi-Asset
|
Alternative
|
Cash
Management
|
Total
|
||||||||||||||||||
|
AUM at October 1, 2017
|
$
|
286.0
|
|
$
|
311.7
|
|
$
|
132.5
|
|
$
|
16.7
|
|
$
|
6.3
|
|
$
|
753.2
|
|
||||||
|
Long-term inflows
|
71.2
|
|
63.9
|
|
25.6
|
|
4.8
|
|
—
|
|
165.5
|
|
||||||||||||
|
Long-term outflows
|
(82.4
|
)
|
(88.5
|
)
|
(29.0
|
)
|
(3.6
|
)
|
—
|
|
(203.5
|
)
|
||||||||||||
|
Long-term net flows
|
(11.2
|
)
|
|
(24.6
|
)
|
|
(3.4
|
)
|
|
1.2
|
|
|
—
|
|
(38.0
|
)
|
||||||||
|
Cash management net flows
|
—
|
|
—
|
|
—
|
|
—
|
|
3.5
|
|
3.5
|
|
||||||||||||
|
Total net flows
|
(11.2
|
)
|
(24.6
|
)
|
(3.4
|
)
|
1.2
|
|
3.5
|
|
(34.5
|
)
|
||||||||||||
|
Acquisition
|
—
|
|
9.8
|
|
—
|
|
—
|
|
—
|
|
9.8
|
|
||||||||||||
|
Net market change, distributions and other
|
(16.3
|
)
|
7.7
|
|
(2.4
|
)
|
0.1
|
|
(0.5
|
)
|
(11.4
|
)
|
||||||||||||
|
AUM at September 30, 2018
|
$
|
258.5
|
|
$
|
304.6
|
|
$
|
126.7
|
|
$
|
18.0
|
|
$
|
9.3
|
|
$
|
717.1
|
|
||||||
|
(in billions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
as of September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
United States
|
$
|
1,024.0
|
|
$
|
477.9
|
|
$
|
482.0
|
|
114
|
%
|
(1
|
%)
|
|||||
|
International
|
||||||||||||||||||
|
Asia-Pacific
|
168.6
|
|
89.0
|
|
91.4
|
|
89
|
%
|
(3
|
%)
|
||||||||
|
Europe, Middle East and Africa
|
141.8
|
|
87.9
|
|
98.3
|
|
61
|
%
|
(11
|
%)
|
||||||||
|
Latin America
1
|
59.4
|
|
13.5
|
|
15.6
|
|
340
|
%
|
(13
|
%)
|
||||||||
|
Canada
|
25.1
|
|
24.3
|
|
29.8
|
|
3
|
%
|
(18
|
%)
|
||||||||
|
Total international
|
$
|
394.9
|
|
$
|
214.7
|
|
$
|
235.1
|
|
84
|
%
|
(9
|
%)
|
|||||
|
Total
|
$
|
1,418.9
|
|
$
|
692.6
|
|
$
|
717.1
|
|
105
|
%
|
(3
|
%)
|
|||||
|
1
|
Includes North America-based advisers serving non-resident clients.
|
|
(in billions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
United States
|
$
|
587.2
|
|
$
|
473.3
|
|
$
|
491.1
|
|
24
|
%
|
(4
|
%)
|
|||||
|
International
|
|
|
|
|
||||||||||||||
|
Asia-Pacific
|
102.4
|
|
90.4
|
|
95.2
|
|
13
|
%
|
(5
|
%)
|
||||||||
|
Europe, Middle East and Africa
|
97.8
|
|
91.5
|
|
105.8
|
|
7
|
%
|
(14
|
%)
|
||||||||
|
Latin America
1
|
23.1
|
|
14.6
|
|
17.3
|
|
58
|
%
|
(16
|
%)
|
||||||||
|
Canada
|
22.4
|
|
27.2
|
|
31.1
|
|
(18
|
%)
|
(13
|
%)
|
||||||||
|
Total international
|
$
|
245.7
|
|
$
|
223.7
|
|
$
|
249.4
|
|
10
|
%
|
(10
|
%)
|
|||||
|
Total
|
$
|
832.9
|
|
$
|
697.0
|
|
$
|
740.5
|
|
19
|
%
|
(6
|
%)
|
|||||
|
1
|
Includes North America-based advisers serving non-resident clients.
|
|
Peer Group Comparison
1
|
Benchmark Comparison
2
|
|||||||||||||||||||||||
|
% of Mutual Fund AUM
in Top Two Peer Group Quartiles
|
% of Institutional AUM
Exceeding Benchmark
|
|||||||||||||||||||||||
|
as of September 30, 2020
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
||||||||||||||||
|
Fixed Income
|
58
|
%
|
53
|
%
|
51
|
%
|
56
|
%
|
73
|
%
|
80
|
%
|
92
|
%
|
97
|
%
|
||||||||
|
Equity
|
48
|
%
|
56
|
%
|
56
|
%
|
47
|
%
|
28
|
%
|
33
|
%
|
27
|
%
|
50
|
%
|
||||||||
|
Total AUM
3
|
47
|
%
|
48
|
%
|
47
|
%
|
58
|
%
|
63
|
%
|
69
|
%
|
73
|
%
|
84
|
%
|
||||||||
|
1
|
Mutual fund performance is sourced from Morningstar and measures the percent of ranked AUM in the top two quartiles versus peers. Total mutual fund AUM measured for the 1-, 3-, 5- and 10-year periods represents 39%, 38%, 38% and 36% of our total AUM as of
September 30, 2020
.
|
|
2
|
Institutional performance measures the percent of institutional AUM beating its benchmark. The benchmark comparisons are based on each account’s/composite’s (composites may include retail separately managed accounts and mutual fund assets managed as part of the same strategy) return as compared to a market index that has been selected to be generally consistent with the asset class of the account/composite. Total institutional AUM measured for the 1-, 3-, 5- and 10-year periods represents 55%, 54%, 52% and 48% of our total AUM as of
September 30, 2020
.
|
|
3
|
Total AUM includes performance of our multi-asset and alternative AUM, which each represent 9% of our total AUM at
September 30, 2020
.
|
|
(in millions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Investment management fees
|
$
|
3,981.7
|
|
$
|
3,985.2
|
|
$
|
4,367.5
|
|
0
|
%
|
(9
|
%)
|
|||||
|
Sales and distribution fees
|
1,362.0
|
|
1,444.6
|
|
1,599.8
|
|
(6
|
%)
|
(10
|
%)
|
||||||||
|
Shareholder servicing fees
|
195.1
|
|
216.3
|
|
221.9
|
|
(10
|
%)
|
(3
|
%)
|
||||||||
|
Other
|
27.7
|
|
23.3
|
|
15.3
|
|
19
|
%
|
52
|
%
|
||||||||
|
Total Operating Revenues
|
$
|
5,566.5
|
|
$
|
5,669.4
|
|
$
|
6,204.5
|
|
(2
|
%)
|
(9
|
%)
|
|||||
|
(in basis points)
|
Industry Average
1
|
|||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||
|
Fixed Income
2
|
27
|
29
|
30
|
|||
|
Equity
3
|
32
|
33
|
36
|
|||
|
Multi-Asset
|
37
|
38
|
40
|
|||
|
Alternative
4
|
62
|
72
|
77
|
|||
|
Cash Management
|
16
|
16
|
16
|
|||
|
1
|
U.S. industry asset-weighted average management fee rates were calculated using information available from Lipper, a Refinitiv Company, as of September 30,
2020
,
2019
and
2018
and include all U.S.-registered open-end funds that reported expense data to Lipper as of the funds’ most recent annual report date, and for which expenses were equal to or greater than zero. As defined by Lipper, management fees include fees from providing advisory and fund administration services. The averages combine retail and institutional funds data and include all share classes and distribution channels, without exception. Variable annuity and fund of fund products are not included.
|
|
2
|
The decreases in the average rate in fiscal years
2020
and
2019
reflect higher weightings of two large low-fee passive funds and lower weightings of two large higher-fee actively managed funds.
|
|
3
|
The decreases in the average rate in fiscal years
2020
and
2019
reflect higher weightings of two large low-fee passive funds.
|
|
4
|
The decreases in the average rate in fiscal years
2020
and
2019
reflect higher weightings of one large low-fee passive fund.
|
|
(in millions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Asset-based fees
|
$
|
1,096.3
|
|
$
|
1,188.2
|
|
$
|
1,314.3
|
|
(8
|
%)
|
(10
|
%)
|
|||||
|
Sales-based fees
|
245.9
|
|
244.0
|
|
270.3
|
|
1
|
%
|
(10
|
%)
|
||||||||
|
Contingent sales charges
|
19.8
|
|
12.4
|
|
15.2
|
|
60
|
%
|
(18
|
%)
|
||||||||
|
Sales and Distribution Fees
|
$
|
1,362.0
|
|
$
|
1,444.6
|
|
$
|
1,599.8
|
|
(6
|
%)
|
(10
|
%)
|
|||||
|
(in millions)
|
2020
|
2019
|
2018
|
2020 vs. 2019
|
2019 vs. 2018
|
|||||||||||||
|
for the fiscal years ended September 30,
|
||||||||||||||||||
|
Compensation and benefits
|
$
|
1,873.9
|
|
$
|
1,584.7
|
|
$
|
1,390.6
|
|
18
|
%
|
14
|
%
|
|||||
|
Sales, distribution and marketing
|
1,703.1
|
|
1,819.6
|
|
2,039.7
|
|
(6
|
%)
|
(11
|
%)
|
||||||||
|
Information systems and technology
|
288.4
|
|
258.5
|
|
243.9
|
|
12
|
%
|
6
|
%
|
||||||||
|
Occupancy
|
147.9
|
|
133.6
|
|
128.6
|
|
11
|
%
|
4
|
%
|
||||||||
|
Amortization of intangible assets
|
54.0
|
|
14.7
|
|
1.8
|
|
267
|
%
|
717
|
%
|
||||||||
|
General, administrative and other
|
450.3
|
|
391.4
|
|
371.7
|
|
15
|
%
|
5
|
%
|
||||||||
|
Total Operating Expenses
|
$
|
4,517.6
|
|
$
|
4,202.5
|
|
$
|
4,176.3
|
|
7
|
%
|
1
|
%
|
|||||
|
(in millions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Salaries, wages and benefits
|
$
|
1,072.1
|
|
$
|
974.9
|
|
$
|
928.4
|
|
10
|
%
|
5
|
%
|
|||||
|
Variable compensation
|
551.2
|
|
490.6
|
|
454.3
|
|
12
|
%
|
8
|
%
|
||||||||
|
Acquisition-related retention
|
195.8
|
|
63.7
|
|
7.9
|
|
207
|
%
|
706
|
%
|
||||||||
|
Special termination benefits
|
54.8
|
|
55.5
|
|
—
|
|
(1
|
%)
|
NM
|
|
||||||||
|
Compensation and Benefits Expenses
|
$
|
1,873.9
|
|
$
|
1,584.7
|
|
$
|
1,390.6
|
|
18
|
%
|
14
|
%
|
|||||
|
(in millions)
|
2020
|
2019
|
2018
|
2020 vs. 2019
|
2019 vs. 2018
|
|||||||||||||
|
for the fiscal years ended September 30,
|
||||||||||||||||||
|
Asset-based expenses
|
$
|
1,369.0
|
|
$
|
1,476.0
|
|
$
|
1,703.9
|
|
(7
|
%)
|
(13
|
%)
|
|||||
|
Sales-based expenses
|
253.8
|
|
257.8
|
|
255.1
|
|
(2
|
%)
|
1
|
%
|
||||||||
|
Amortization of deferred sales commissions
|
80.3
|
|
85.8
|
|
80.7
|
|
(6
|
%)
|
6
|
%
|
||||||||
|
Sales, Distribution and Marketing
|
$
|
1,703.1
|
|
$
|
1,819.6
|
|
$
|
2,039.7
|
|
(6
|
%)
|
(11
|
%)
|
|||||
|
(in millions)
|
2020 vs. 2019
|
2019 vs. 2018
|
||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||||||||
|
Investment and other income (losses), net
|
$
|
(38.4
|
)
|
$
|
141.4
|
|
$
|
200.3
|
|
NM
|
|
(29
|
%)
|
|||||
|
Interest expense
|
(33.4
|
)
|
(22.4
|
)
|
(46.3
|
)
|
49
|
%
|
(52
|
%)
|
||||||||
|
Investment and other income of consolidated investment products, net
|
70.2
|
|
78.8
|
|
59.6
|
|
(11
|
%)
|
32
|
%
|
||||||||
|
Expenses of consolidated investment products
|
(29.4
|
)
|
(16.9
|
)
|
(26.6
|
)
|
74
|
%
|
(36
|
%)
|
||||||||
|
Other Income (Expenses), Net
|
$
|
(31.0
|
)
|
$
|
180.9
|
|
$
|
187.0
|
|
NM
|
|
(3
|
%)
|
|||||
|
Accounting Classification
1
|
Total Direct Portfolio
|
|||||||||||||||||||||||
|
(in millions)
|
Cash and Cash Equivalents
|
Investments,
at Fair Value |
Equity Method Investments
|
Other
Investments
|
Direct Investments
in CIPs
|
|||||||||||||||||||
|
Cash and Cash Equivalents
|
$
|
3,026.8
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,026.8
|
|
||||||
|
Investments
|
||||||||||||||||||||||||
|
Fixed Income
|
—
|
|
198.7
|
|
139.7
|
|
40.8
|
|
242.9
|
|
622.1
|
|
||||||||||||
|
Equity
|
—
|
|
209.4
|
|
308.9
|
|
22.8
|
|
67.9
|
|
609.0
|
|
||||||||||||
|
Multi-Asset
|
—
|
|
64.4
|
|
50.2
|
|
—
|
|
64.3
|
|
178.9
|
|
||||||||||||
|
Alternative
|
—
|
|
32.3
|
|
183.4
|
|
19.9
|
|
410.2
|
|
645.8
|
|
||||||||||||
|
Total investments
|
—
|
|
504.8
|
|
682.2
|
|
83.5
|
|
785.3
|
|
2,055.8
|
|
||||||||||||
|
Total Cash and Cash Equivalents and Investments
|
$
|
3,026.8
|
|
$
|
504.8
|
|
$
|
682.2
|
|
$
|
83.5
|
|
$
|
785.3
|
|
$
|
5,082.6
|
|
||||||
|
1
|
See Note 1 – Significant Accounting Policies and Note
6
– Investments in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for information on investment accounting classifications.
|
|
•
|
Elimination of operating revenues upon consolidation of investment products.
|
|
•
|
Acquisition-related retention compensation.
|
|
•
|
Impact on compensation and benefits expense from gains and losses on investments related to Legg Mason deferred compensation plans and seed investments, which is offset in investment and other income (expense), net.
|
|
•
|
Other acquisition-related expenses including professional fees and fair value adjustments related to contingent consideration liabilities.
|
|
•
|
Amortization and impairment of intangible assets and goodwill.
|
|
•
|
Special termination benefits related to workforce optimization initiatives related to the acquisition of Legg Mason in fiscal year 2020, and voluntary separation and workforce reduction initiatives of 4.5% of our global workforce in fiscal year 2019.
|
|
•
|
Acquisition-related performance-based investment management fees which are passed through as compensation and benefits expense.
|
|
•
|
Sales and distribution fees and a portion of investment management fees allocated to cover sales, distribution and marketing expenses paid to the financial advisers and other intermediaries who sell our funds on our behalf.
|
|
•
|
Elimination of operating revenues upon consolidation of investment products.
|
|
•
|
Activities of CIPs, including investment and other income (losses), net, other expenses and income (loss) attributable to noncontrolling interests, net of revenues eliminated upon consolidation of investment products.
|
|
•
|
Acquisition-related retention compensation.
|
|
•
|
Other acquisition-related expenses including professional fees and fair value adjustments related to contingent consideration liabilities and the market-based component of retention awards.
|
|
•
|
Amortization and impairment of intangible assets.
|
|
•
|
Impairment of goodwill and write off of noncontrolling interests related to the wind down of a recently acquired business.
|
|
•
|
Special termination benefits related to workforce optimization initiatives related to the acquisition of Legg Mason in fiscal year 2020, and voluntary separation and workforce reduction initiatives of 4.5% of our global workforce in fiscal year 2019.
|
|
•
|
Net gains or losses on investments related to Legg Mason deferred compensation plans which are not offset by compensation and benefits expense.
|
|
•
|
Unrealized investment gains and losses included in investment and other income (losses), net, other than those that are offset by compensation and benefits expense.
|
|
•
|
Interest expense for amortization of Legg Mason debt premium from acquisition-date fair value adjustment.
|
|
•
|
Net income tax expense of the above adjustments based on the respective blended rates applicable to the adjustments.
|
|
(in millions)
|
2020
|
2019
|
2018
|
|||||||||
|
for the fiscal years ended September 30,
|
||||||||||||
|
Operating income
|
$
|
1,048.9
|
|
$
|
1,466.9
|
|
$
|
2,028.2
|
|
|||
|
Add (subtract):
|
||||||||||||
|
Elimination of operating revenues upon consolidation of investment products¹
|
23.6
|
|
30.7
|
|
35.2
|
|
||||||
|
Acquisition-related retention
|
195.8
|
|
63.7
|
|
7.9
|
|
||||||
|
Compensation and benefits expense from gain on deferred compensation and seed investments, net
|
1.2
|
|
—
|
|
—
|
|
||||||
|
Other acquisition-related expenses
|
57.4
|
|
9.4
|
|
14.7
|
|
||||||
|
Amortization of intangible assets
|
54.0
|
|
14.7
|
|
1.8
|
|
||||||
|
Impairment of goodwill and intangible assets
|
55.4
|
|
13.3
|
|
5.7
|
|
||||||
|
Special termination benefits
|
54.8
|
|
55.5
|
|
—
|
|
||||||
|
Adjusted operating income
|
$
|
1,491.1
|
|
$
|
1,654.2
|
|
$
|
2,093.5
|
|
|||
|
Total operating revenues
|
$
|
5,566.5
|
|
$
|
5,669.4
|
|
$
|
6,204.5
|
|
|||
|
Add (subtract):
|
||||||||||||
|
Acquisition-related pass through performance fees
|
(9.4
|
)
|
—
|
|
—
|
|
||||||
|
Sales and distribution fees
|
(1,362.0
|
)
|
(1,444.6
|
)
|
(1,599.8
|
)
|
||||||
|
Allocation of investment management fees for sales, distribution and marketing expenses
|
(341.1
|
)
|
(375.0
|
)
|
(439.9
|
)
|
||||||
|
Elimination of operating revenues upon consolidation of investment products¹
|
23.6
|
|
30.7
|
|
35.2
|
|
||||||
|
Adjusted operating revenues
|
$
|
3,877.6
|
|
$
|
3,880.5
|
|
$
|
4,200.0
|
|
|||
|
Operating margin
|
18.8
|
%
|
25.9
|
%
|
32.7
|
%
|
||||||
|
Adjusted operating margin
|
38.5
|
%
|
42.6
|
%
|
49.8
|
%
|
||||||
|
(in millions, except per share data)
|
2020
|
2019
|
2018
|
|||||||||
|
for the fiscal years ended September 30,
|
||||||||||||
|
Net income attributable to Franklin Resources, Inc.
|
$
|
798.9
|
|
$
|
1,195.7
|
|
$
|
764.4
|
|
|||
|
Add (subtract):
|
||||||||||||
|
Net income of consolidated investment products¹
|
(4.6
|
)
|
(3.7
|
)
|
(5.8
|
)
|
||||||
|
Acquisition-related retention
|
195.8
|
|
63.7
|
|
7.9
|
|
||||||
|
Other acquisition-related expenses
|
58.6
|
|
9.4
|
|
14.5
|
|
||||||
|
Amortization of intangible assets
|
54.0
|
|
14.7
|
|
1.8
|
|
||||||
|
Impairment of goodwill and intangible assets
|
55.4
|
|
13.3
|
|
5.7
|
|
||||||
|
Special termination benefits
|
54.8
|
|
55.5
|
|
—
|
|
||||||
|
Net gains on deferred compensation plan investments not offset by compensation and benefits expense
|
(0.1
|
)
|
—
|
|
—
|
|
||||||
|
Unrealized investment losses included in investment and other income (losses), net
|
221.0
|
|
20.0
|
|
15.3
|
|
||||||
|
Interest expense for amortization of debt premium
|
(4.7
|
)
|
—
|
|
—
|
|
||||||
|
Write off of noncontrolling interests
|
(16.7
|
)
|
—
|
|
—
|
|
||||||
|
Net income tax expense of adjustments
|
(101.4
|
)
|
(37.3
|
)
|
(5.7
|
)
|
||||||
|
Adjusted net income
|
$
|
1,311.0
|
|
$
|
1,331.3
|
|
$
|
798.1
|
|
|||
|
Diluted earnings per share
|
$
|
1.59
|
|
$
|
2.35
|
|
$
|
1.39
|
|
|||
|
Adjusted diluted earnings per share
|
2.61
|
|
2.62
|
|
1.45
|
|
||||||
|
1
|
The impact of consolidated investment products is summarized as follows:
|
|
(in millions)
|
2020
|
2019
|
2018
|
|||||||||
|
for the fiscal years ended September 30,
|
||||||||||||
|
Elimination of operating revenues upon consolidation
|
$
|
(23.6
|
)
|
$
|
(30.7
|
)
|
$
|
(35.2
|
)
|
|||
|
Other income, net
|
33.6
|
|
39.8
|
|
18.6
|
|
||||||
|
Less: income (loss) attributable to noncontrolling interests
|
5.4
|
|
5.4
|
|
(22.4
|
)
|
||||||
|
Net income
|
$
|
4.6
|
|
$
|
3.7
|
|
$
|
5.8
|
|
|||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Operating cash flows
|
$
|
1,021.4
|
|
$
|
201.6
|
|
$
|
2,229.7
|
|
|||
|
Investing cash flows
|
(3,243.1
|
)
|
(1,077.1
|
)
|
(290.4
|
)
|
||||||
|
Financing cash flows
|
194.2
|
|
(40.5
|
)
|
(3,761.7
|
)
|
||||||
|
(in millions)
|
||||||||||||
|
as of September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Assets
|
||||||||||||
|
Cash and cash equivalents
|
$
|
3,026.8
|
|
$
|
5,803.4
|
|
$
|
6,610.8
|
|
|||
|
Receivables
|
1,114.8
|
|
740.0
|
|
733.7
|
|
||||||
|
Investments
|
982.2
|
|
2,029.4
|
|
2,130.6
|
|
||||||
|
Total Liquid Assets
|
$
|
5,123.8
|
|
$
|
8,572.8
|
|
$
|
9,475.1
|
|
|||
|
Liability
|
||||||||||||
|
Debt
|
$
|
3,017.1
|
|
$
|
696.9
|
|
$
|
695.9
|
|
|||
|
(in millions)
|
Payments Due by Fiscal Year
|
|||||||||||||||||||||||||||
|
as of September 30, 2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
There-
after |
Total
|
|||||||||||||||||||||
|
Debt
1
|
||||||||||||||||||||||||||||
|
Principal
|
$
|
—
|
|
$
|
300.0
|
|
$
|
—
|
|
$
|
250.0
|
|
$
|
400.0
|
|
$
|
1,750.0
|
|
$
|
2,700.0
|
|
|||||||
|
Interest
|
125.2
|
|
125.2
|
|
116.8
|
|
116.8
|
|
101.2
|
|
1,913.9
|
|
2,499.1
|
|
||||||||||||||
|
Operating leases
|
134.8
|
|
131.5
|
|
125.4
|
|
89.0
|
|
50.2
|
|
153.5
|
|
684.4
|
|
||||||||||||||
|
Purchase obligations
2
|
186.7
|
|
112.4
|
|
60.9
|
|
46.2
|
|
28.7
|
|
8.2
|
|
443.1
|
|
||||||||||||||
|
Purchase consideration obligation
3
|
47.9
|
|
31.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
79.8
|
|
||||||||||||||
|
Total Contractual Obligations
|
494.6
|
|
701.0
|
|
303.1
|
|
502.0
|
|
580.1
|
|
3,825.6
|
|
6,406.4
|
|
||||||||||||||
|
Committed capital contributions
4
|
335.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
335.6
|
|
||||||||||||||
|
Contingent consideration liabilities
5
|
1.7
|
|
10.2
|
|
8.1
|
|
7.1
|
|
—
|
|
—
|
|
27.1
|
|
||||||||||||||
|
Federal transition tax liability
6
|
53.3
|
|
74.1
|
|
74.1
|
|
138.9
|
|
185.2
|
|
231.6
|
|
757.2
|
|
||||||||||||||
|
Total Contractual Obligations, Commitments, and Contingent Liabilities
|
$
|
885.2
|
|
$
|
785.3
|
|
$
|
385.3
|
|
$
|
648.0
|
|
$
|
765.3
|
|
$
|
4,057.2
|
|
$
|
7,526.3
|
|
|||||||
|
1
|
Debt principal represents amounts due on maturity. Excludes 1.600% notes with a principal amount of $750.0 million due 2030 which were issued on October 19, 2020. See Note
22
– Subsequent Event in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report.
|
|
2
|
Purchase obligations include contractual amounts that will be due to purchase goods and services to be used in our operations and may be canceled at earlier times than those indicated under certain conditions that may include termination fees.
|
|
3
|
Represents purchase consideration payments to be made in connection with the acquisition of Legg Mason.
|
|
4
|
Committed capital contributions relate to discretionary commitments to invest in sponsored funds and other investment products and entities, including CIPs. Generally, the timing of the funding of these commitments is unknown as they are callable on demand at any time prior to the expiration of the commitment periods.
|
|
5
|
The amount of contingent consideration liabilities reflected for any year represents the expected settlement amounts as of September 30, 2020. The fair value of the aggregate contingent consideration liability at September 30, 2020 totaled
$25.3 million
and is included in other liabilities in the consolidated balance sheet.
|
|
6
|
Transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiaries’ earnings under the Tax Act.
|
|
(in millions, except per share data)
|
||||||||||||||||
|
Quarter ended
|
December 31
|
March 31
|
June 30
|
September 30
|
||||||||||||
|
Fiscal year 2020
1
|
||||||||||||||||
|
Operating revenues
|
$
|
1,389.2
|
|
$
|
1,311.2
|
|
$
|
1,161.1
|
|
$
|
1,705.0
|
|
||||
|
Operating income
|
372.9
|
|
339.9
|
|
232.5
|
|
103.6
|
|
||||||||
|
Net income attributable to Franklin Resources, Inc.
2
|
350.5
|
|
79.1
|
|
290.4
|
|
78.9
|
|
||||||||
|
Earnings per share
|
||||||||||||||||
|
Basic
|
$
|
0.70
|
|
$
|
0.16
|
|
$
|
0.58
|
|
$
|
0.15
|
|
||||
|
Diluted
|
0.70
|
|
0.16
|
|
0.58
|
|
0.15
|
|
||||||||
|
Dividends declared per share
|
$
|
0.27
|
|
$
|
0.27
|
|
$
|
0.27
|
|
$
|
0.27
|
|
||||
|
AUM
(in billions)
|
||||||||||||||||
|
Ending
|
$
|
698.3
|
|
$
|
580.3
|
|
$
|
622.8
|
|
$
|
1,418.9
|
|
||||
|
Average
|
693.8
|
|
655.8
|
|
605.0
|
|
1,227.8
|
|
||||||||
|
Fiscal year 2019
1
|
||||||||||||||||
|
Operating revenues
|
$
|
1,385.4
|
|
$
|
1,412.8
|
|
$
|
1,448.4
|
|
$
|
1,422.8
|
|
||||
|
Operating income
|
385.3
|
|
367.3
|
|
349.2
|
|
365.1
|
|
||||||||
|
Net income attributable to Franklin Resources, Inc.
3
|
275.9
|
|
367.5
|
|
245.9
|
|
306.4
|
|
||||||||
|
Earnings per share
|
|
|
|
|
||||||||||||
|
Basic
|
$
|
0.54
|
|
$
|
0.72
|
|
$
|
0.48
|
|
$
|
0.61
|
|
||||
|
Diluted
|
0.54
|
|
0.72
|
|
0.48
|
|
0.61
|
|
||||||||
|
Dividends declared per share
|
$
|
0.26
|
|
$
|
0.26
|
|
$
|
0.26
|
|
$
|
0.26
|
|
||||
|
AUM
(in billions)
|
||||||||||||||||
|
Ending
|
$
|
649.9
|
|
$
|
712.3
|
|
$
|
715.2
|
|
$
|
692.6
|
|
||||
|
Average
|
683.2
|
|
688.6
|
|
710.8
|
|
702.0
|
|
||||||||
|
1
|
In the quarter ended September 30, 2020, the Company changed the presentation of its consolidated statements of income to include dividend and interest income and other expenses from consolidated investment products in non-operating income. Amounts for the comparative prior fiscal quarters have been reclassified to conform to the current presentation. These reclassifications had no impact on previously reported net income attributable to Franklin Resources, Inc.
|
|
2
|
Information presented for the quarter ended September 30, 2020 includes the impact of the Legg Mason, Inc. acquisition effective
July 31, 2020
. See Note
3
– Acquisitions in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report for more information.
|
|
3
|
The quarter ended June 30, 2019 includes an income tax charge of
$86.4 million
due to the reversal of a tax benefit recognized in fiscal year 2018 upon issuance of final regulations by the U.S. Department of Treasury.
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
|
(in millions)
|
Carrying Value
|
Carrying Value
Assuming a 10% Increase
|
Carrying Value
Assuming a 10% Decrease
|
|||||||||
|
Investments, at fair value
|
$
|
504.8
|
|
$
|
555.3
|
|
$
|
454.3
|
|
|||
|
Direct investments in CIPs
|
785.3
|
|
863.8
|
|
706.8
|
|
||||||
|
Total
|
$
|
1,290.1
|
|
$
|
1,419.1
|
|
$
|
1,161.1
|
|
|||
|
Item 8.
|
Financial Statements and Supplementary Data.
|
|
CONTENTS
|
Page
|
|
|
66
|
||
|
67
|
||
|
Consolidated Financial Statements of Franklin Resources, Inc. and its consolidated subsidiaries:
|
||
|
70
|
||
|
71
|
||
|
72
|
||
|
73
|
||
|
74
|
||
|
76
|
||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||
|
(in millions, except per share data)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Operating Revenues
|
||||||||||||
|
Investment management fees
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Sales and distribution fees
|
|
|
|
|
|
|
||||||
|
Shareholder servicing fees
|
|
|
|
|
|
|
||||||
|
Other
|
|
|
|
|
|
|
||||||
|
Total operating revenues
|
|
|
|
|
|
|
||||||
|
Operating Expenses
|
||||||||||||
|
Compensation and benefits
|
|
|
|
|
|
|
||||||
|
Sales, distribution and marketing
|
|
|
|
|
|
|
||||||
|
Information systems and technology
|
|
|
|
|
|
|
||||||
|
Occupancy
|
|
|
|
|
|
|
||||||
|
Amortization of intangible assets
|
|
|
|
|
|
|
||||||
|
General, administrative and other
|
|
|
|
|
|
|
||||||
|
Total operating expenses
|
|
|
|
|
|
|
||||||
|
Operating Income
|
|
|
|
|
|
|
||||||
|
Other Income (Expenses)
|
||||||||||||
|
Investment and other income (losses), net
|
(
|
)
|
|
|
|
|
||||||
|
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Investment and other income of consolidated investment products, net
|
|
|
|
|
|
|
||||||
|
Expenses of consolidated investment products
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other income (expenses), net
|
(
|
)
|
|
|
|
|
||||||
|
Income before taxes
|
|
|
|
|
|
|
||||||
|
Taxes on income
|
|
|
|
|
|
|
||||||
|
Net income
|
|
|
|
|
|
|
||||||
|
Less: net income (loss) attributable to
|
||||||||||||
|
Redeemable noncontrolling interests
|
|
|
|
|
(
|
)
|
||||||
|
Nonredeemable noncontrolling interests
|
(
|
)
|
|
|
(
|
)
|
||||||
|
Net Income Attributable to Franklin Resources, Inc.
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Earnings per Share
|
||||||||||||
|
Basic
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Diluted
|
|
|
|
|
|
|
||||||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Net Income
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Other Comprehensive Income (Loss)
|
||||||||||||
|
Currency translation adjustments, net of tax
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Net unrealized gains (losses) on defined benefit plans, net of tax
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Net unrealized gains on investments, net of tax
|
|
|
|
|
|
|
||||||
|
Total other comprehensive income (loss)
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Total comprehensive income
|
|
|
|
|
|
|
||||||
|
Less: comprehensive income (loss) attributable to
|
||||||||||||
|
Redeemable noncontrolling interests
|
|
|
|
|
(
|
)
|
||||||
|
Nonredeemable noncontrolling interests
|
(
|
)
|
|
|
(
|
)
|
||||||
|
Comprehensive Income Attributable to Franklin Resources, Inc.
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(in millions, except share and per share data)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
|
|
$
|
|
|
||
|
Receivables
|
|
|
|
|
||||
|
Investments (including $504.8 and $589.7 at fair value at September 30, 2020 and 2019)
|
|
|
|
|
||||
|
Assets of consolidated investment products
|
||||||||
|
Cash and cash equivalents
|
|
|
|
|
||||
|
Receivables
|
|
|
|
|
||||
|
Investments, at fair value
|
|
|
|
|
||||
|
Property and equipment, net
|
|
|
|
|
||||
|
Goodwill
|
|
|
|
|
||||
|
Intangible assets, net
|
|
|
|
|
||||
|
Operating lease right-of-use assets
|
|
|
|
|
||||
|
Other
|
|
|
|
|
||||
|
Total Assets
|
$
|
|
|
$
|
|
|
||
|
Liabilities
|
||||||||
|
Compensation and benefits
|
$
|
|
|
$
|
|
|
||
|
Accounts payable and accrued expenses
|
|
|
|
|
||||
|
Dividends
|
|
|
|
|
||||
|
Commissions
|
|
|
|
|
||||
|
Income taxes
|
|
|
|
|
||||
|
Debt
|
|
|
|
|
||||
|
Liabilities of consolidated investment products
|
||||||||
|
Accounts payable and accrued expenses
|
|
|
|
|
||||
|
Debt
|
|
|
|
|
||||
|
Deferred tax liabilities
|
|
|
|
|
||||
|
Operating lease liabilities
|
|
|
|
|
||||
|
Other
|
|
|
|
|
||||
|
Total liabilities
|
|
|
|
|
||||
|
Commitments and Contingencies (Note 16)
|
|
|
||||||
|
Redeemable Noncontrolling Interests
|
|
|
|
|
||||
|
Stockholders’ Equity
|
||||||||
|
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none issued
|
|
|
|
|
||||
|
Common stock, $0.10 par value, 1,000,000,000 shares authorized; 495,116,677 and 499,303,269 shares issued and outstanding at September 30, 2020 and 2019
|
|
|
|
|
||||
|
Retained earnings
|
|
|
|
|
||||
|
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
|
Total Franklin Resources, Inc. stockholders’ equity
|
|
|
|
|
||||
|
Nonredeemable noncontrolling interests
|
|
|
|
|
||||
|
Total stockholders’ equity
|
|
|
|
|
||||
|
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
|
$
|
|
|
$
|
|
|
||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS
’
EQUITY
|
|||||||||||||||||||||||||||||||
|
Franklin Resources, Inc.
|
Non-
redeemable
Non-
controlling
Interests
|
Total
Stockholders’
Equity
|
|||||||||||||||||||||||||||||
|
Common Stock
|
Capital
in Excess
of Par
Value
|
Retained
Earnings
|
Accum-
ulated
Other
Compre-
hensive
Loss
|
Stockholders’
Equity
|
|||||||||||||||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||||
|
as of and for the fiscal years ended
September 30, 2020, 2019 and 2018 |
Shares
|
Amount
|
|||||||||||||||||||||||||||||
|
Balance at October 1, 2017
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||||
|
Adoption of new accounting guidance
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
|
|
|||||||||||||||
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||
|
Dividends declared on common stock ($3.92 per share)
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||
|
Repurchase of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||
|
Issuance of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Net distributions and other
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||
|
Net consolidation of investment product
|
|
|
|
|
|||||||||||||||||||||||||||
|
Purchase of noncontrolling interest
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||||
|
Balance at September 30, 2018
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||||
|
Adoption of new accounting guidance
|
|
|
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||||||
|
Net income
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
|
Dividends declared on common stock ($1.04 per share)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
|
Repurchase of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Issuance of common stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Stock-based compensation
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Net subscriptions and other
|
|
|
|
|
|||||||||||||||||||||||||||
|
Net consolidation of investment product
|
|
|
|
|
|||||||||||||||||||||||||||
|
Acquisition
|
|
|
|
|
|||||||||||||||||||||||||||
|
Balance at September 30, 2019
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||||
|
Net income (loss)
|
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||
|
Other comprehensive income
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Dividends declared on common stock ($1.08 per share)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
|
Repurchase of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Issuance of common stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Stock-based compensation
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Net subscriptions and other
|
|
|
|
|
|||||||||||||||||||||||||||
|
Deconsolidation of investment products
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||
|
Acquisitions
|
|
|
|
|
|||||||||||||||||||||||||||
|
Wind-down of a subsidiary
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||
|
Balance at September 30, 2020
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Net Income
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
|
Stock-based compensation
|
|
|
|
|
|
|
||||||
|
Amortization of deferred sales commissions
|
|
|
|
|
|
|
||||||
|
Depreciation and other amortization
|
|
|
|
|
|
|
||||||
|
Amortization of intangible assets
|
|
|
|
|
|
|
||||||
|
Impairments of intangible assets and goodwill
|
|
|
|
|
|
|
||||||
|
Losses (income) from investments in equity method investees
|
|
|
|
|
(
|
)
|
||||||
|
Net losses on investments of consolidated investment products
|
|
|
|
|
|
|
||||||
|
Net (purchase) liquidation of investments by consolidated investment products
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Deferred income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Other
|
(
|
)
|
|
|
|
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Decrease (increase) in receivables and other assets
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Decrease (increase) in receivables of consolidated investment products
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Decrease (increase) in investments, net
|
|
|
|
|
(
|
)
|
||||||
|
Decrease in operating lease right-of-use assets
|
|
|
|
|
|
|
||||||
|
Increase (decrease) in accrued compensation and benefits
|
(
|
)
|
|
|
(
|
)
|
||||||
|
Decrease in commissions payable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Increase (decrease) in income taxes payable
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
(
|
)
|
|
|
(
|
)
|
||||||
|
Increase in accounts payable and accrued expenses of consolidated investment products
|
|
|
|
|
|
|
||||||
|
Decrease in operating lease liabilities
|
(
|
)
|
|
|
|
|
||||||
|
Net cash provided by operating activities
|
|
|
|
|
|
|
||||||
|
Purchase of investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Liquidation of investments
|
|
|
|
|
|
|
||||||
|
Purchase of investments by consolidated collateralized loan obligations
|
(
|
)
|
|
|
|
|
||||||
|
Liquidation of investments by consolidated collateralized loan obligations
|
|
|
|
|
|
|
||||||
|
Purchase of investments by consolidated investment products
|
|
|
|
|
(
|
)
|
||||||
|
Liquidation of investments by consolidated investment products
|
|
|
|
|
|
|
||||||
|
Issuance of loans receivable, net
|
(
|
)
|
|
|
|
|
||||||
|
Additions of property and equipment, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Acquisitions, net of cash acquired
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Net consolidation (deconsolidation) of investment products
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
FRANKLIN RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[Table continued from previous page]
|
||||||||||||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Issuance of common stock
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Dividends paid on common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Repurchase of common stock
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Payments on debt
|
|
|
|
|
(
|
)
|
||||||
|
Proceeds from loan
|
|
|
|
|
|
|
||||||
|
Payments on loan
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Proceeds from debt of consolidated investment products
|
|
|
|
|
|
|
||||||
|
Payments on debt by consolidated investment products
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Payments on contingent consideration liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Noncontrolling interests
|
|
|
|
|
|
|
||||||
|
Net cash provided by (used in) financing activities
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(
|
)
|
(
|
)
|
||||||
|
Decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
|
|
||||||
|
Cash and Cash Equivalents, End of Year
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Supplemental Disclosure of Cash Flow Information
|
||||||||||||
|
Cash paid for income taxes
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Cash paid for interest
|
|
|
|
|
|
|
||||||
|
Cash paid for interest by consolidated investment products
|
|
|
|
|
|
|
||||||
|
2019
|
2018
|
|||||||||||||||||||||||
|
(in millions)
for the fiscal years ended September
|
As
Reported
|
Adjustments
|
As
Amended
|
As
Reported |
Adjustments
|
As
Amended |
||||||||||||||||||
|
Operating Revenues
|
||||||||||||||||||||||||
|
Other
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||||||
|
Operating Expenses
|
||||||||||||||||||||||||
|
General, administrative and other
1
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
||||||||||||
|
Other Income (Expenses)
|
||||||||||||||||||||||||
|
Investment and other income (losses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest expense
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
||||||||||||
|
Investment and other income of consolidated investment products, net
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Expenses of consolidated investment products
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||||||
|
Other income (expenses), net
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
1
|
General, administrative and other includes amortization of intangible assets.
|
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities, which may include published net asset values (“NAV”) for fund products.
|
|
Level 2
|
Observable inputs other than Level 1 quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, or model-based valuation methodologies that utilize significant assumptions that are observable or corroborated by observable market data.
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity. These inputs require significant management judgment and reflect the Company’s estimation of assumptions that market participants would use in pricing the asset or liability.
|
|
(in millions)
|
Estimated
Fair Value
|
|||
|
as of July 31, 2020
|
||||
|
Cash and cash equivalents
|
$
|
|
|
|
|
Cash and cash equivalents of consolidated investment products
|
|
|
||
|
Investments
|
|
|
||
|
Investments of consolidated investment products
|
|
|
||
|
Receivables
|
|
|
||
|
Indefinite-lived intangible assets
|
|
|
||
|
Definite-lived intangible assets
1
|
|
|
||
|
Goodwill
|
|
|
||
|
Deferred tax assets
|
|
|
||
|
Other assets
|
|
|
||
|
Debt
|
(
|
)
|
||
|
Debt of consolidated investment products
|
(
|
)
|
||
|
Compensation and benefits
|
(
|
)
|
||
|
Deferred tax liabilities
|
(
|
)
|
||
|
Other liabilities
|
(
|
)
|
||
|
Redeemable noncontrolling interests
|
(
|
)
|
||
|
Nonredeemable noncontrolling interests
|
(
|
)
|
||
|
Total Identifiable Net Assets
|
$
|
|
|
|
|
1
|
Includes
$
|
|
(in millions)
|
||||||||
|
for the fiscal year ended September 30,
|
2020
|
2019
|
||||||
|
Revenues
|
$
|
|
|
$
|
|
|
||
|
Net Income Attributable to Franklin Resources, Inc.
|
|
|
|
|
||||
|
(in millions)
|
Estimated
Fair Value
|
|||
|
as of February 1, 2019
|
||||
|
Cash
|
$
|
|
|
|
|
Investments
|
|
|
||
|
Investments of consolidated investment products
|
|
|
||
|
Indefinite-lived intangible assets
|
|
|
||
|
Definite-lived intangible assets
|
|
|
||
|
Goodwill
|
|
|
||
|
Other assets
|
|
|
||
|
Other liabilities
|
(
|
)
|
||
|
Nonredeemable noncontrolling interests
|
(
|
)
|
||
|
Total Identifiable Net Assets
|
$
|
|
|
|
|
(in millions, except per share data)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Net income attributable to Franklin Resources, Inc.
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Less: allocation of earnings to participating nonvested stock and stock unit awards
|
|
|
|
|
|
|
||||||
|
Net Income Available to Common Stockholders
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Weighted-average shares outstanding – basic
|
|
|
|
|
|
|
||||||
|
Dilutive effect of nonparticipating nonvested stock unit awards
|
|
|
|
|
|
|
||||||
|
Weighted-Average Shares Outstanding – Diluted
|
|
|
|
|
|
|
||||||
|
Earnings per Share
|
||||||||||||
|
Basic
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Diluted
|
|
|
|
|
|
|
||||||
|
(in millions)
|
United
States
|
Luxembourg
|
Americas
Excluding
United
States
|
Asia-
Pacific
|
Europe,
Middle East
and Africa,
Excluding
Luxembourg
|
Total
|
||||||||||||||||||
|
for the fiscal year ended
September 30, 2020 |
||||||||||||||||||||||||
|
Investment management fees
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||
|
Sales and distribution fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Shareholder servicing fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||
|
(in millions)
|
United
States
|
Luxembourg
|
Americas
Excluding
United
States
|
Asia-
Pacific
|
Europe,
Middle East
and Africa,
Excluding
Luxembourg
|
Total
|
||||||||||||||||||
|
for the fiscal year ended
September 30, 2019 |
||||||||||||||||||||||||
|
Investment management fees
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||
|
Sales and distribution fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Shareholder servicing fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
(in millions)
|
United
States
|
Luxembourg
|
Americas
Excluding
United
States
|
Asia-
Pacific
|
Europe,
Middle East
and Africa,
Excluding
Luxembourg
|
Total
|
||||||||||||||||||
|
for the fiscal year ended
September 30, 2018 |
||||||||||||||||||||||||
|
Investment management fees
|
$
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||||
|
Sales and distribution fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Shareholder servicing fees
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Investments, at fair value
|
||||||||
|
Sponsored funds and separate accounts
|
$
|
|
|
$
|
|
|
||
|
Investments related to long-term incentive plans
|
|
|
|
|
||||
|
Other equity and debt investments
|
|
|
|
|
||||
|
Life settlement contracts
|
|
|
|
|
||||
|
Total investments, at fair value
|
|
|
|
|
||||
|
Investments in equity method investees
|
|
|
|
|
||||
|
Other investments
|
|
|
|
|
||||
|
Total
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
NAV as a
Practical Expedient |
Total
|
|||||||||||||||
|
as of September 30, 2020
|
||||||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Investments, at fair value
|
||||||||||||||||||||
|
Sponsored funds and separate accounts
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Investments related to long-term incentive plans
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other equity and debt investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Contingent consideration asset
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Total Assets Measured at Fair Value
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Liabilities
|
||||||||||||||||||||
|
Contingent consideration liabilities
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
—
|
|
$
|
|
|
|||||
|
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
NAV as a
Practical Expedient |
Total
|
|||||||||||||||
|
as of September 30, 2019
|
||||||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Investments, at fair value
|
||||||||||||||||||||
|
Sponsored funds and separate accounts
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Other equity and debt investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Life settlement contracts
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Total Assets Measured at Fair Value
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
||||
|
|
2020
|
2019
|
||||||||||||||||||
|
(in millions)
|
Investments
|
Contingent
Consideration
Asset
|
Contingent
Consideration
Liabilities
|
Investments
|
Contingent
Consideration
Liability
|
|||||||||||||||
|
for the fiscal years ended September 30,
|
||||||||||||||||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
|||||
|
Acquisitions
|
—
|
|
|
|
(
|
)
|
—
|
|
|
|
||||||||||
|
Total realized and unrealized gains (losses)
|
||||||||||||||||||||
|
Included in investment and other income (losses), net
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Included in general, administrative and other expense
|
|
|
|
|
|
|
|
|
(
|
)
|
||||||||||
|
Purchases
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Sales
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
||||||||||
|
Settlements
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
||||||||||
|
Consolidation of investment product
|
(
|
)
|
—
|
|
—
|
|
|
|
—
|
|
||||||||||
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Transfers out of Level 3
|
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||
|
Balance at End of Year
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
|||||
|
Change in unrealized gains (losses) included in net income relating to assets and liabilities held at end of year
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Fair
Value
Level
|
2020
|
2019
|
||||||||||||||||
|
(in millions)
|
Carrying
Value
|
Estimated
Fair Value
|
Carrying
Value
|
Estimated
Fair Value
|
||||||||||||||
|
as of September 30,
|
||||||||||||||||||
|
Financial Assets
|
||||||||||||||||||
|
Cash and cash equivalents
|
1
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Other investments
|
||||||||||||||||||
|
Time deposits
|
2
|
|
|
|
|
|
|
|
|
|||||||||
|
Equity securities
|
3
|
|
|
|
|
|
|
|
|
|||||||||
|
Loans receivable
|
3
|
|
|
|
|
|
|
|
|
|||||||||
|
Financial Liability
|
||||||||||||||||||
|
Debt
|
2
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
(in millions)
|
Useful Lives
In Years
|
|||||||||
|
as of September 30,
|
2020
|
2019
|
||||||||
|
Buildings and leasehold improvements
|
$
|
|
|
$
|
|
|
5 – 35
|
|||
|
Software
|
|
|
|
|
3 - 10
|
|||||
|
Equipment and furniture
|
|
|
|
|
3 - 10
|
|||||
|
Land
|
|
|
|
|
N/A
|
|||||
|
Total cost
|
|
|
|
|
||||||
|
Less: accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||||
|
Property and Equipment, Net
|
$
|
|
|
$
|
|
|
||||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Goodwill
|
$
|
|
|
$
|
|
|
||
|
Indefinite-lived intangible assets
|
|
|
|
|
||||
|
Definite-lived intangible assets, net
|
|
|
|
|
||||
|
Goodwill and Other Intangible Assets, Net
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
||
|
Acquisitions
|
|
|
|
|
||||
|
Impairment
|
(
|
)
|
|
|
||||
|
Foreign exchange revaluation
|
|
|
(
|
)
|
||||
|
Balance at End of Year
|
$
|
|
|
$
|
|
|
||
|
2020
|
2019
|
|||||||||||||||||||||||
|
(in millions)
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Carrying
Value
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Carrying
Value
|
||||||||||||||||||
|
as of September 30,
|
||||||||||||||||||||||||
|
Management contracts
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||||||
|
Trade names
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
|
Developed software
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||||||
|
(in millions)
|
||||
|
for the fiscal years ending September 30,
|
Amount
|
|||
|
2021
|
$
|
|
|
|
|
2022
|
|
|
||
|
2023
|
|
|
||
|
2024
|
|
|
||
|
2025
|
|
|
||
|
Thereafter
|
|
|
||
|
Total
|
$
|
|
|
|
|
(in millions)
|
2020
|
Effective
Interest Rate
|
2019
|
Effective
Interest Rate
|
||||||||||
|
as of September 30,
|
||||||||||||||
|
Notes issued by Franklin Resources, Inc.
|
||||||||||||||
|
$300 million 2.800% senior notes due September 2022
|
$
|
|
|
|
%
|
$
|
|
|
|
%
|
||||
|
$400 million 2.850% senior notes due March 2025
|
|
|
|
%
|
|
|
|
%
|
||||||
|
Total notes issued by Franklin Resources, Inc.
|
|
|
|
|
||||||||||
|
Notes issued by Legg Mason (a subsidiary of Franklin)
|
||||||||||||||
|
$250 million 3.950% senior notes due July 2024
|
|
|
|
%
|
|
|
N/A
|
|
||||||
|
$450 million 4.750% senior notes due March 2026
|
|
|
|
%
|
|
|
N/A
|
|
||||||
|
$550 million 5.625% senior notes due January 2044
|
|
|
|
%
|
|
|
N/A
|
|
||||||
|
$250 million 6.375% junior notes due March 2056
|
|
|
|
%
|
|
|
N/A
|
|
||||||
|
$500 million 5.450% junior notes due September 2056
|
|
|
|
%
|
|
|
N/A
|
|
||||||
|
Total notes issued by Legg Mason
|
|
|
|
|
||||||||||
|
Other
|
|
|||||||||||||
|
Loan due December 2019
|
|
|
N/A
|
|
|
|
|
%
|
||||||
|
Debt issuance costs
|
(
|
)
|
(
|
)
|
||||||||||
|
Total
|
$
|
|
|
$
|
|
|
||||||||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
|
|
$
|
|
|
||
|
Receivables
|
|
|
|
|
||||
|
Investments, at fair value
|
|
|
|
|
||||
|
Total Assets
|
$
|
|
|
$
|
|
|
||
|
Liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$
|
|
|
$
|
|
|
||
|
Debt
|
|
|
|
|
||||
|
Other liabilities
|
|
|
|
|
||||
|
Total liabilities
|
|
|
|
|
||||
|
Redeemable Noncontrolling Interests
|
|
|
|
|
||||
|
Stockholders
’
Equity
|
||||||||
|
Franklin Resources, Inc.’s interests
|
|
|
|
|
||||
|
Nonredeemable noncontrolling interests
|
|
|
|
|
||||
|
Total stockholders’ equity
|
|
|
|
|
||||
|
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders
’
Equity
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
NAV as a
Practical
Expedient
|
Total
|
|||||||||||||||
|
as of September 30, 2020
|
||||||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Cash and cash equivalents of CLOs
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
—
|
|
$
|
|
|
|||||
|
Receivables of CLOs
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Investments
|
|
|
||||||||||||||||||
|
Equity and debt securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loans
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Real Estate
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Total Assets Measured at Fair Value
|
$
|
|
|
$
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
||||
|
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
NAV as a
Practical
Expedient
|
Total
|
|||||||||||||||
|
as of September 30, 2019
|
||||||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Investments
|
||||||||||||||||||||
|
Equity and debt securities
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Real estate
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Loans
|
|
|
|
|
|
|
—
|
|
|
|
||||||||||
|
Total Assets Measured at Fair Value
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
(in millions)
|
Equity and Debt
Securities
|
Real Estate
|
Loans
|
Total
Level 3
Assets
|
||||||||||||
|
for the fiscal year ended September 30, 2020
|
||||||||||||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||
|
Acquisition
|
|
|
|
|
|
|
|
|
||||||||
|
Realized and unrealized losses included in investment and other income of consolidated investment products, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Purchases
|
|
|
|
|
|
|
|
|
||||||||
|
Sales and settlements
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||
|
Deconsolidations
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
||||||||
|
Transfers out of Level 3
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Foreign exchange revaluation
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at End of Year
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|||||
|
Change in unrealized losses included in net income relating to assets held at end of year
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
(in millions)
|
Equity and Debt Securities
|
Real Estate
|
Loans
|
Total
Level 3
Assets
|
||||||||||||
|
for the fiscal year ended September 30, 2019
|
||||||||||||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||
|
Acquisition
|
|
|
|
|
|
|
|
|
||||||||
|
Realized and unrealized gains (losses) included in investment and other income of consolidated investment products, net
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||
|
Purchases
|
|
|
|
|
|
|
|
|
||||||||
|
Sales and settlements
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||
|
Transfers into Level 3
|
|
|
|
|
|
|
|
|
||||||||
|
Transfers out of Level 3
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Foreign exchange revaluation
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Balance at End of Year
|
$
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
|||
|
Change in unrealized gains (losses) included in net income relating to assets held at end of year
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
(in millions)
|
||||||||||
|
as of September 30, 2020
|
Fair Value
|
Valuation Technique
|
Significant Unobservable Inputs
|
Range (Weighted Average
1
)
|
||||||
|
Equity and debt securities
|
$
|
|
|
Discounted cash flow
|
Discount rate
|
4.0%–23.0% (11.5%)
|
||||
|
Discount for lack of marketability
|
17.0%
|
|||||||||
|
Risk premium
|
9.7%–19.3% (16.7%)
|
|||||||||
|
|
|
Market pricing
|
Private sale pricing
|
$0.02–$100.00 ($13.01) per share
|
||||||
|
|
|
Market comparable companies
|
Enterprise value/
EBITDA multiple |
7.0–19.1 (10.8)
|
||||||
|
Discount for lack of marketability
|
20.0%–25.2% (21.9%)
|
|||||||||
|
Risk premium
|
55.0%
|
|||||||||
|
Enterprise value/
Revenue multiple |
7.5
|
|||||||||
|
Price-to-earnings ratio
|
9.4–10.0 (9.7)
|
|||||||||
|
Real estate
|
|
|
Discounted cash flow
|
Discount rate
|
4.5%–6.5% (5.2%)
|
|||||
|
Exit capitalization rate
|
6.0%
|
|||||||||
|
|
|
Yield capitalization
|
Equivalent yield
|
4.3%–6.1% (5.2%)
|
||||||
|
(in millions)
|
||||||||||
|
as of September 30, 2019
|
Fair Value
|
Valuation Technique
|
Significant Unobservable Inputs
|
Range (Weighted Average
1
)
|
||||||
|
Equity and debt securities
|
$
|
|
|
Discounted cash flow
|
Discount rate
|
4.8%–17.4% (10.0%)
|
||||
|
Discount for lack of marketability
|
17.0%–24.7% (20.0%)
|
|||||||||
|
|
|
Market comparable companies
|
Enterprise value/
EBITDA multiple |
4.5–21.9 (10.8)
|
||||||
|
Discount for lack of marketability
|
15.0%–30.0% (23.1%)
|
|||||||||
|
Risk premium
|
18.9%
|
|||||||||
|
Enterprise value/
Revenue multiple |
3.7
|
|||||||||
|
|
|
Market pricing
|
Private sale pricing
|
$0.25–$20.13 ($2.06) per share
|
||||||
|
Real estate
|
|
|
Discounted cash flow
|
Discount rate
|
6.4%–7.4% (7.1%)
|
|||||
|
|
|
Yield capitalization
|
Equivalent yield
|
4.3%–6.1% (5.4%)
|
||||||
|
1
|
Based on the relative fair value of the instruments.
|
|
(in millions)
|
Fair Value
Level
|
2020
|
2019
|
|||||||||||||||
|
Carrying
Value
|
Estimated
Fair Value
|
Carrying
Value
|
Estimated
Fair Value
|
|||||||||||||||
|
as of September 30,
|
||||||||||||||||||
|
Financial Asset
|
||||||||||||||||||
|
Cash and cash equivalents
|
1
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Financial Liabilities
|
||||||||||||||||||
|
Debt of CLOs
|
2
|
|
|
|
|
|
|
|
|
|||||||||
|
Other debt
|
3
|
|
|
|
|
|
|
|
|
|||||||||
|
(in millions)
|
2020
|
2019
|
||||||||||
|
as of September 30,
|
Amount
|
Weighted-
Average
Effective
Interest
Rate
|
Amount
|
Weighted-
Average Effective Interest Rate |
||||||||
|
Debt of CLOs
|
$
|
|
|
|
$
|
|
|
N/A
|
||||
|
Other debt
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
|
|
$
|
|
|
||||||
|
(in millions)
|
||||
|
for the fiscal years ending September 30,
|
Amount
|
|||
|
2021
|
$
|
|
|
|
|
2022
|
|
|
||
|
2023
|
|
|
||
|
2024
|
|
|
||
|
2025
|
|
|
||
|
Thereafter
|
|
|
||
|
Total
|
$
|
|
|
|
|
(in millions)
|
||||
|
as of September 30,
|
2020
|
|||
|
Unpaid principal balance
|
$
|
|
|
|
|
Difference between unpaid principal balance and fair value
|
(
|
)
|
||
|
Fair Value
|
$
|
|
|
|
|
(in millions)
for the fiscal years ended September 30,
|
2020
|
2019
1
|
2018
1
|
|||||||||||||||||
|
CIPs
|
Minority Interests
|
Total
|
||||||||||||||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||||
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Business divestiture
|
|
|
(
|
)
|
(
|
)
|
|
|
|
|
||||||||||
|
Net income (loss)
|
|
|
|
|
|
|
|
|
(
|
)
|
||||||||||
|
Net subscriptions (distributions) and other
|
|
|
(
|
)
|
|
|
|
|
|
|
||||||||||
|
Net deconsolidations
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||
|
Balance at End of Year
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
1
|
Represents redeemable noncontrolling interests of CIPs.
|
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Investments
|
$
|
|
|
$
|
|
|
||
|
Receivables
|
|
|
|
|
||||
|
Loans receivable
|
|
|
|
|
||||
|
Total
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Current expense
|
||||||||||||
|
Federal
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
State
|
|
|
|
|
|
|
||||||
|
Non-U.S.
|
|
|
|
|
|
|
||||||
|
Deferred benefit
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
U.S.
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Non-U.S.
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Deferred Tax Assets
|
||||||||
|
Capitalized mixed service costs
|
$
|
|
|
$
|
|
|
||
|
Net operating loss and state credit carry-forwards
|
|
|
|
|
||||
|
Deferred compensation and benefits
|
|
|
|
|
||||
|
Foreign tax credit carry-forwards
|
|
|
|
|
||||
|
Debt premium
|
|
|
|
|
||||
|
Stock-based compensation
|
|
|
|
|
||||
|
Unrealized foreign exchange losses
|
|
|
|
|
||||
|
Other
|
|
|
|
|
||||
|
Total deferred tax assets
|
|
|
|
|
||||
|
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
|
Deferred tax assets, net of valuation allowance
|
|
|
|
|
||||
|
Deferred Tax Liabilities
|
||||||||
|
Goodwill and other purchased intangibles
|
|
|
|
|
||||
|
Depreciation on property and equipment
|
|
|
|
|
||||
|
Other
|
|
|
|
|
||||
|
Total deferred tax liabilities
|
|
|
|
|
||||
|
Net Deferred Tax Liability
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Other assets
|
$
|
|
|
$
|
|
|
||
|
Deferred tax liabilities
|
|
|
|
|
||||
|
Net Deferred Tax Liability
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
|||||||||||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
||||||||||||||||||
|
Federal taxes at statutory rate
|
$
|
|
|
|
%
|
$
|
|
|
|
%
|
$
|
|
|
|
%
|
||||||
|
Transition tax on deemed repatriation of undistributed foreign earnings
|
|
|
|
|
|
|
|
%
|
|
|
|
%
|
|||||||||
|
Revaluation of net deferred tax liabilities
|
|
|
|
|
|
|
|
|
(
|
)
|
(
|
%)
|
|||||||||
|
Other Tax Act impacts
|
|
|
|
|
|
|
|
|
|
|
|
%
|
|||||||||
|
State taxes, net of federal tax effect
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
|||||||||
|
Capital loss on investments, net of valuation allowance
|
(
|
)
|
(
|
%)
|
|
|
|
|
|
|
|
|
|||||||||
|
Effect of non-U.S. operations
|
|
|
|
%
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
|||||||||
|
Effect of net loss (income) attributable to noncontrolling interests
|
|
|
|
%
|
(
|
)
|
(
|
%)
|
|
|
|
%
|
|||||||||
|
Other
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
|||||||||
|
Tax Provision
|
$
|
|
|
|
%
|
$
|
|
|
|
%
|
$
|
|
|
|
%
|
||||||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Balance at beginning of year
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Additions from business combinations
|
|
|
|
|
|
|
||||||
|
Additions for tax positions of prior years
|
|
|
|
|
|
|
||||||
|
Reductions for tax positions of prior years
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Tax positions related to the current year
|
|
|
|
|
|
|
||||||
|
Settlements with taxing authorities
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Expirations of statute of limitations
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Balance at End of Year
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
(in millions)
|
||||
|
for the fiscal year ended September 30, 2020
|
Amount
|
|||
|
Operating lease cost
1
|
$
|
|
|
|
|
Finance lease cost
|
|
|
||
|
Variable lease cost
|
|
|
||
|
Less: sublease income
|
(
|
)
|
||
|
Total lease expense
|
$
|
|
|
|
|
1
|
Substantially all is included in occupancy expense.
|
|
(in millions)
|
Amount
|
|||
|
for the fiscal year ended September 30, 2020
|
||||
|
Operating cash flows from operating leases included in the measurement of operating lease liabilities
|
$
|
|
|
|
|
ROU assets obtained in exchange for new/modified operating lease liabilities
|
|
|
||
|
(in millions)
|
Amount
|
|||
|
for the fiscal years ending September 30,
|
||||
|
2021
|
$
|
|
|
|
|
2022
|
|
|
||
|
2023
|
|
|
||
|
2024
|
|
|
||
|
2025
|
|
|
||
|
Thereafter
|
|
|
||
|
Total lease payments
|
|
|
||
|
Less: interest
|
(
|
)
|
||
|
Operating lease liabilities
|
$
|
|
|
|
|
(in millions)
|
||||
|
for the fiscal years ending September 30,
|
Amount
|
|||
|
2020
|
$
|
|
|
|
|
2021
|
|
|
||
|
2022
|
|
|
||
|
2023
|
|
|
||
|
2024
|
|
|
||
|
Thereafter
|
|
|
||
|
Total Minimum Lease Payments
|
$
|
|
|
|
|
(in millions)
|
Subleases
|
Leases
|
||||||
|
for the fiscal years ending September 30,
|
||||||||
|
2021
|
$
|
|
|
$
|
|
|
||
|
2022
|
|
|
|
|
||||
|
2023
|
|
|
|
|
||||
|
2024
|
|
|
|
|
||||
|
2025
|
|
|
|
|
||||
|
Thereafter
|
|
|
|
|
||||
|
Total
|
$
|
|
|
$
|
|
|
||
|
Weighted-average remaining lease term
|
|
|
|
|
||||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Stock and stock unit awards
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Employee stock investment plan
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
(shares in thousands)
|
Time-Based
Shares
|
Performance-
Based Shares
|
Total
Shares
|
Weighted-Average
Grant-Date
Fair Value
|
|||||||||
|
for the fiscal year ended September 30, 2020
|
|||||||||||||
|
Nonvested balance at September 30, 2019
|
|
|
|
|
|
|
$
|
|
|
||||
|
Granted
|
|
|
|
|
|
|
|
|
|||||
|
Vested
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|||||
|
Forfeited/canceled
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|||||
|
Nonvested balance at September 30, 2020
|
|
|
|
|
|
|
$
|
|
|
||||
|
(in millions)
|
||||||||
|
as of September 30,
|
2020
|
2019
|
||||||
|
Property and Equipment, Net
|
||||||||
|
United States
|
$
|
|
|
$
|
|
|
||
|
Europe, Middle East and Africa
|
|
|
|
|
||||
|
Asia-Pacific
|
|
|
|
|
||||
|
Americas excluding United States
|
|
|
|
|
||||
|
Total
|
$
|
|
|
$
|
|
|
||
|
(in millions)
|
||||||||||||
|
for the fiscal years ended September 30,
|
2020
|
2019
|
2018
|
|||||||||
|
Dividend income
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
|
Interest income
|
|
|
|
|
|
|
||||||
|
Gains (losses) on investments, net
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Income (losses) from investments in equity method investees
|
(
|
)
|
(
|
)
|
|
|
||||||
|
Rental income
|
|
|
|
|
|
|
||||||
|
Foreign currency exchange (losses) gains, net
|
(
|
)
|
|
|
|
|
||||||
|
Other, net
|
|
|
|
|
|
|
||||||
|
Investment and Other Income (Losses), Net
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
|||
|
(in millions)
|
Currency
Translation
Adjustments
|
Unrealized
Losses on Defined Benefit Plans |
Unrealized
Gains on Investments |
Total
|
||||||||||||
|
as of and for the fiscal years ended
September 30, 2020, 2019 and 2018 |
||||||||||||||||
|
Balance at October 1, 2017
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||||
|
Adoption of new accounting guidance
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||
|
Other comprehensive income (loss)
|
|
|
||||||||||||||
|
Other comprehensive income (loss) before reclassifications, net of tax
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Reclassifications to compensation and benefits expense, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
Reclassifications to net investment and other income (losses), net of tax
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
||||||||
|
Total other comprehensive income (loss)
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||
|
Balance at September 30, 2018
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||||
|
Adoption of new accounting guidance
|
—
|
|
—
|
|
(
|
)
|
(
|
)
|
||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||
|
Other comprehensive loss before reclassifications, net of tax
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
|
Reclassifications to compensation and benefits expense, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
Reclassifications to net investment and other income (losses), net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
Total other comprehensive income (loss)
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
||||||||
|
Balance at September 30, 2019
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||||
|
Other comprehensive income (loss)
|
||||||||||||||||
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
|
(
|
)
|
(
|
)
|
|
|
||||||||
|
Reclassifications to compensation and benefits expense, net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
Reclassifications to net investment and other income (losses), net of tax
|
|
|
|
|
|
|
|
|
||||||||
|
Total other comprehensive income (loss)
|
|
|
(
|
)
|
|
|
|
|
||||||||
|
Balance at September 30, 2020
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||||
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
|
Item 9A.
|
Controls and Procedures.
|
|
Item 9B.
|
Other Information.
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
|
Item 11.
|
Executive Compensation.
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
|
Item 14.
|
Principal Accountant Fees and Services.
|
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
|
(a)(1)
|
The financial statements filed as part of this report are listed in Item 8 of this Annual Report.
|
|
(a)(2)
|
No financial statement schedules are required to be filed as part of this report because all such schedules have been omitted. Such omission has been made on the basis that information is provided in the financial statements, or in the related notes thereto, in Item 8 of this Annual Report or is not required to be filed as the information is not applicable.
|
|
(a)(3)
|
The exhibits listed on the Exhibit Index to this Annual Report are incorporated herein by reference.
|
|
Item 16.
|
Form 10‑K Summary.
|
|
Exhibit No.
|
|
Description
|
|
|
2.1
|
|
||
|
3.1
|
|
||
|
3.2
|
|
||
|
3.3
|
|
||
|
3.4
|
|
||
|
3.5
|
|
||
|
3.6
|
|
||
|
4.1
|
|
||
|
4.2
|
|
||
|
4.3
|
|
||
|
4.4
|
|
||
|
4.5
|
|
||
|
4.6
|
|
||
|
4.7
|
|
||
|
Exhibit No.
|
|
Description
|
|
|
4.8
|
|
||
|
4.9
|
|
||
|
4.10
|
|
||
|
4.11
|
|
||
|
4.12
|
|
||
|
4.13
|
|
||
|
4.14
|
|
||
|
4.15
|
|
||
|
4.16
|
|
||
|
10.1
|
|
||
|
10.2
|
|
||
|
10.3
|
|
||
|
10.4
|
|
||
|
10.5
|
|
||
|
10.6
|
|
||
|
10.7
|
|
||
|
10.8
|
|
||
|
10.9
|
|
||
|
10.10
|
|
||
|
Exhibit No.
|
|
Description
|
|
|
10.11
|
|
||
|
10.12
|
|
||
|
21
|
|
||
|
23
|
|
||
|
31.1
|
|
||
|
31.2
|
|
||
|
32.1
|
|
||
|
32.2
|
|
||
|
101
|
|
The following materials from Registrant’s Annual Report on Form 10‑K for the fiscal year ended September 30, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL), include: (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes (filed herewith)
|
|
|
104
|
|
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
|
|
|
*
|
Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
|
|
**
|
Management contract or compensatory plan or arrangement
|
|
|
|
FRANKLIN RESOURCES, INC.
|
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Matthew Nicholls
|
|
|
|
|
Matthew Nicholls, Executive Vice President and Chief Financial Officer
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Gwen L. Shaneyfelt
|
|
|
Gwen L. Shaneyfelt, Chief Accounting Officer
|
||
|
Date:
|
November 20, 2020
|
By:
|
/s/ Jennifer M. Johnson
|
|
Jennifer M. Johnson, President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|||
|
Date:
|
November 20, 2020
|
By:
|
/s/ Matthew Nicholls
|
|
Matthew Nicholls, Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|||
|
Date:
|
November 20, 2020
|
By:
|
/s/ Gwen L. Shaneyfelt
|
|
Gwen L. Shaneyfelt, Chief Accounting Officer
(Principal Accounting Officer)
|
|||
|
Date:
|
November 20, 2020
|
By:
|
/s/ Peter K. Barker
|
|
|
|
|
Peter K. Barker, Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Mariann Byerwalter
|
|
|
|
|
Mariann Byerwalter, Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Gregory E. Johnson
|
|
|
|
|
Gregory E. Johnson, Executive Chairman, Chairman of the Board
and Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Rupert H. Johnson, Jr.
|
|
|
|
|
Rupert H. Johnson, Jr., Vice Chairman and Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Anthony J. Noto
|
|
Anthony J. Noto, Director
|
|||
|
Date:
|
November 20, 2020
|
By:
|
/s/ Mark C. Pigott
|
|
|
|
|
Mark C. Pigott, Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Laura Stein
|
|
|
|
|
Laura Stein, Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Seth H. Waugh
|
|
|
|
|
Seth H. Waugh, Director
|
|
Date:
|
November 20, 2020
|
By:
|
/s/ Geoffrey Y. Yang
|
|
|
|
|
Geoffrey Y. Yang, Director
|